Oil Prices Drop as Beijing Threatens COVID-19 Lockdown

Offshore Industry oil and gas production petroleum pipeline.
noomcpk2528 / Getty Images/iStockphoto

The price of oil (and global stocks) dropped for a second day on April 25 as China’s efforts to contain an outbreak of COVID-19 — and the Federal Reserve’s indication that it could raise interest rates — prompted concerns about economic production and demand.

Discover: 20 Genius Things Mark Cuban Says To Do With Your Money
More: 6 Bad Habits That Hike Up Your Grocery Bill

COVID cases continue to rise in Shanghai, with the city reporting more than 19,000 new cases and 51 deaths on Sunday, per CNN Business. Shanghai is already in lockdown, but the prospect of Beijing following suit has global market investors fearing a huge increase in companies suspending production. Such a move may exacerbate existing shipping issues and put more strain on already struggling global supply chains.

The Shanghai Composite Index dropped 5.1% and closed at a 22-month low. This is the worst performance for the index since the beginning of the coronavirus pandemic in Feb. 2020. Other markets have seen similar losses, including a 3.7% decrease in Hong Kong’s Hang Seng Index, a fall of 1.9% in Japan’s Nikkei and a 1.7% tumble for Korea’s Kospi. European markets were hit hard as well.

Make Your Money Work for You

In the U.S., the Dow Jones Industrial Average dropped by 305 points on April 25, the lowest it has been in over a month. Brent crude oil slid 4.76% to $101.10 a barrel and WTI crude oil slipped 4.78% to $97.18 a barrel, dropping for a second day.

The index had already dropped about 980 points, or 2.8%, on April 22.

Fed officials, including Federal Reserve Chair Jerome Powell, hinted that the central bank will table and support a significant U.S. rate increase at its next policy meeting in May (in hopes of taming inflation). If so, expect further increases on mortgage rates, leases, and loan interest rates more broadly.

See: POLL: Do You Think States Should Suspend Their Gas Taxes?
Find: Best Penny Stocks To Buy: Find the Best Ones To Watch

As Beijing begins to mass inoculate its more than 21 million citizens, a population and production lockdown in the capital city would potentially cripple an already weak global supply chain.

More From GOBankingRates

Share this article:

Make Your Money Work for You

About the Author

David Nadelle is a freelance editor and writer based in Ottawa, Canada. After working in the energy industry for 18 years, he decided to change careers in 2016 and concentrate full-time on all aspects of writing. He recently completed a technical communication diploma and holds previous university degrees in journalism, sociology and criminology. David has covered a wide variety of financial and lifestyle topics for numerous publications and has experience copywriting for the retail industry.
Learn More

Best Bank Accounts for September 2022

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.